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LSS and Commercialisation in MSD Daniel J. Hoey Merck Sharp & Dohme (Ireland) Ltd.

LSS and Commercialisation in MSD Daniel J. Hoey Merck Sharp & Dohme (Ireland) Ltd. 16 th October, 2009. Agenda. About Merck & Co., Inc. Lean Six Sigma and Commercialisation Merck Sharp & Dohme in Ireland Lean Commercialisation of ISENTRESS TM. Merck & Co., Inc.

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LSS and Commercialisation in MSD Daniel J. Hoey Merck Sharp & Dohme (Ireland) Ltd.

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  1. LSS and Commercialisation in MSDDaniel J. HoeyMerck Sharp & Dohme (Ireland) Ltd. 16th October, 2009

  2. Agenda • About Merck & Co., Inc. • Lean Six Sigma and Commercialisation • Merck Sharp & Dohme in Ireland • Lean Commercialisation of ISENTRESSTM

  3. Merck & Co., Inc. Merck is a global research-driven pharmaceutical company dedicated to putting patients first. • Founded: 1891 • Number of employees: ~55,000 • Global reach: Does business in 140 countries • 2008 revenue: $23.9 billion

  4. Lean Six Sigma Level 1 Level 2 Level 3 Build Foundation Align and Integrate Achieve “DNA” in the Business Maturity Levels Business Benefits Deploy broadly across Merck Alignment to Scorecard Depth of penetration Project Success, Infrastructure, Capabilities Key Focus Industry Leadership Lean Six Sigma embedded in Key Processes Early Wins Training # BB, GB Savings/Revenue Process Metrics Cycle Time Key Metrics “The Way We Work” Owned by the Business Sponsorship “Push” “Pull” Current Maturity Goal

  5. Commercialisation Focus on Through Put Focus on Speed & Cost Focus on Cost & Reliability Research Commercialisation Supply I IIA PCC IIB Launch Long-term Supply III POC

  6. MSD in Ireland  Dublin  Carlow  Ballydine

  7. Ballydine Plant… facts • Established API manufacturing plant in 1976 • Significantly expanded in 1999 to add Fac03 • Named API Commercialisation site in 2005 • Implemented MPS and Commercialisation organisational changes in December, 2006 • Formulation facility project started in 2007; operational end 2009 • Global API supplier for ~40% of Merck sales (excl. vaccines) • ~400 Employees • 25 international customers ~30 shipments/month

  8. Ballydine Plant… mission PHARM SUPPLY API PROCESS DEVELOPMENT PHARM PROCESS DEVELOPMENT API SUPPLY

  9. Ballydine Plant… mission MPS-Lean Six Sigma + Commercialisation • Lean Processes Ready for Supply • Minimal/No Capital for launch • Technical issues resolved • Variability removed • Standardised work developed • Electronic instructions developed • PAT needs determined • Raw materials qualified • In-process tests removed PGM ROA ACCESS

  10. Lean CommercialisationISENTRESSTM • Quality (better) • Don’t short the market (more reliable) • Rapid Launch and ability to react (faster) • Cost to enable developing country access (cheaper) • First in a new class of treatments for HIV • Changes paradigm in HIV management • Impact 40 million people worldwide

  11. ISENTRESSTMreducing cost Eastern Europe & Central Asia 1.7 million Western Europe 740,000 • Business Need • Reduce Product Cost • Minimise at-risk Capital • Enable Access East Asia 750,000 North America 1.4 million North Africa & Middle East 460,000 Caribbean 250,000 South & South-East Asia 7.8 million Latin America 1.7 million Sub-Saharan Africa 24.7 million Oceania 81,000 Total number living with HIV - 40 million • Achievements • 18% reduction in API standard cost • 40% reduction in Cycle Time • 22% improvement in Capacity • < $50K Capital for initial campaign • Transitioning from Internal to External Supply Source: WHO, 3 by 5 Progress Report: December 2005

  12. ISENTRESSTMcreating a robust process Cpk 0.34 to 5.08 • Lean Processes Ready for Supply • Minimal/No Capital for launch • Technical issues resolved • Variability removed • Standardised work developed • Electronic instructions developed • PAT needs determined • Raw materials qualified • In-process tests removed Challenges • Supplier/Input: • Raw material quality • Process: • Reject rate ~13% • Output/Customer: • Market threat Resolution • Stabilize Supplier process • DMAIC to improve Merck Process • Identify KPIV’s • DOE to optimize charge ratio • Modified the process

  13. Summary • Capability development is a powerful motivator of employees • Operational Excellence can help expand the mandate for the Irish subsidiary • Lean Six Sigma is an enabler for process development and new product introduction • Irish plants can establish a mission that enables them to compete on value, in ways other than low cost.

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